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Accumulate Colgate-Palmolive India; target of Rs 1760: Dolat Capital Market

Dolat Capital Market recommended accumulate rating on Colgate-Palmolive India with a target price of Rs 1760 in its research report dated January 28, 2021.

January 29, 2021 / 06:59 PM IST
 
 
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Dolat Capital Market's research report on Colgate-Palmolive India

Colgate’s Q3FY21 revenue and EBITDA were in line with our expectation but APAT was marginally ahead. Domestic business posted 10.1% sales growth during Q3. All categories witnessed positive growth driven by household penetration. A 400bps expansion in GM was a key positive. With better product mix, we expect gross margins to remain healthy. A&P spends increased significantly by 360bps, to support innovations. We believe that the A&P spends would remain elevated to support volume growth and gain market share. Going ahead, government efforts to increase farmer’s wages and focus on rural infrastructure should boost oral care category. However, increase in competition and better product offerings by competitors like Dabur remains a key challenge for Colgate.


Outlook

We have revised our FY21/22/23E EPS estimates to Rs 36.1/36.9/40.9. We value the stock at 43x FY23 EPS (In line with peers) to arrive at a TP of Rs 1,760. Upgrade to Accumulate.